Hacker News Reader

> why the Glass-Steagle Act needs to come back so people aren't sitting around betting on other people's failures

None of this would have been affected by Glass-Steagall, which dealt with separating commercial and investment banking [1].

[1] https://en.wikipedia.org/wiki/Glass–Steagall_legislation

View on HN

The idea of lending money just so you can profit from its failure is caused by the affiliations between commercial and investment banks.

> lending money just so you can profit from its failure is caused by the affiliations between commercial and investment banks

Not really. Most lenders into this mess never made a dime on the shorting. And most of the shorts’ beneficiaries never loaned a penny. Short selling pre-dates Glass-Steagall. Credit default swaps predate Gramm-Leach-Bliley.

"research suggests similarities between the lax way that home loans were signed in the run-up to the last crisis and the underwriting of many retail mortgages"

https://www.nytimes.com/2020/08/24/business/mall-short-hedge...

And those home loans were allowed because Glass-Steagall was removed, is it wrong to think that although short selling has been around it has been exacerbated by the removal of Glass-Stegall into things like people's homes/livelihood and not just stocks?

Reply on news.ycombinator.com